Why Barnes & Noble is Selling Rugs

  • Share
  • Read Later

One of the many rugs now for sale on bookseller Barnes & Noble's website.

Last week, Barnes & Noble started selling items like rugs and cooking utensils on its website. “If shoppers are buying cookbooks from bn.com, it’s natural to offer them cooking supplies at the same time; if shoppers are buying new baby books, it’s natural to offer them baby supplies as well,” said John Foley, B&N’s president of eCommerce. That sounds reasonable enough, but the reality behind the move is that B&N may have no choice but to try something, anything.

The fact is, for the last several years, book sales at B&N’s brick-and-mortar stores have been falling, and the death of Borders, its primary national retail competitor, hasn’t dramatically altered that decline.

The one recent bright spot for B&N, however, has been its website — bn.com — where strong sales have been led by the success of its Nook e-reader. In the last quarter, online sales rose 36.9% to $198 million. Its site now makes up 14% of the retailer’s overall sales.

(MORE: Why Barnes & Noble Avoided Borders’ Fate)

Now, B&N is trying to take advantage of that online success by offering all sorts of non-book items for sale. There will be home products and consumer electronics and items for babies available online. Of course,  B&N has for years sold CDs, notebooks, planners, pens, even Godiva chocolates at its stores, none of which really has anything to do with books. The company says its new offerings are just another step in becoming a one-stop shopping destination. “The unifying theme for all these products is that these are things B&N believes people who read books and care about books would buy,” says Bill Kavaler, senior analyst at Oscar Gruss & Son.

The new items on the website will mostly get to consumers through third-party sellers, which means B&N won’t have to carry the expense of inventory. The bookseller will just take a sales commission of 8% to 15% on each item. That seems smart.

Still, there’s some pretty rich irony in all this for those who have been watching B&N take over the book industry in the past two decades. When B&N and Borders began gaining popularity in the 1990s, their efficiencies of scale seemed likely to drive the small, local bookseller right out of business. And indeed countless such shops are now gone.

But it turned out the economics didn’t quite work for the big guys either. Borders is now gone, and B&N stores are struggling, but the independent bookstores that survived have for the most part stablized —  essentially, Kavaler says, because they’ve been able to cater to their specific markets. Scale, it turns out, wasn’t the crucial factor; knowing exactly what your customers like to read, and what they don’t, is.

(GALLERY: 12 Things We Buy in a Bad Economy)

With its new online endeavor — which will include five new shopping categories: Home and Gift, Consumer Electronics, Arts and Crafts, Toys and Games and Baby — B&N is tiptoeing into the backyards of Amazon and eBay, the two online sellers that have virtually dominated Internet retailing for years.

Kavaler says that the move is necessary. “Just books ain’t enough,” he says. And he’s mildly optimistic it can work: “[Barnes & Noble] isn’t doing anything particularly stupid,” Kavaler says. “And that’s all you can ask.”